How I took my online retail business offline

Gerry Alleaume became so frustrated after dealing with countless requests from friends to repair computers and IT systems, he decided to start a business doing just that. Now, Matesrates Australia has over nine employees and turned over $1.47 million in 2008-09.

The company also operates an online retail store, selling a range of consumer electronics including many Apple products. But last year, Alleaume wanted to take his company to another level and started a physical retail store.

He says adding an offline division made him think about how the business operated, and the differences between digital and physical retail.

How has the business performed this past year?

I won’t lie. The past nine months have been quite hard. The business is doing well, but it’s been difficult because of this impact from the crisis. In the segment we operate we’re always the last to feel the effects of something, and so from a business cycle perspective we’re just feeling it. I think a lot of people judge their behaviour on what the media is saying, so that has hurt us.

We have recorded about 10% growth, so we haven’t gone backwards, but it’s not as good as I would have wanted it. When you don’t hit those high results you’re disappointed.

So why the decision to move offline?

I think I’m starting to find in my client base, that if you want a product and you definitely know what you’re buying, then going online is okay. You can just drop into a different store, and then buy something and you’re fine.

But when you go and buy online, you have nothing more than a picture. And then someone comes to your house with a parcel. I think also we wanted to show that we have a reputable company behind us, because there are so many online businesses that have no customer service support, no contact, and we wanted to break away from that.

Did you notice any other problems in the online space you wanted to avoid?

A lot of businesses lack infrastructure, no support, no customer service. We also found people would come to our office to pick up parcels, so I just thought, what can we do about this? The other point is with sales. I can sell one item on a store, but if I sell that item in a physical store I can pretty much try and sell them other things as well. Online allows people to be exclusive and restricts sales a little bit.

Could you explain that point?

If someone buys in a store, I can guarantee 100% they are going to be happy with that product three months later, provided nothing goes wrong with it. If they buy online though, they might get it and find out it wasn’t really something they wanted and they bought the wrong thing. There is no one there to help them make the right choice.

Because of that, if someone goes into a retail store, they are more likely to buy more in one transaction.

So when did the store open?

The store opened in November. It’s gone very well so far, actually a lot better than I thought it would.

What did you need to keep in mind, in terms of differences between the two formats?

There were a few things, but overall it wasn’t too much of a challenge because the elements remain the same. I really took a look at my stock levels, and made sure they were good. I also made sure the store looked professional, I was involved in the construction, and I had to be very careful about the details of how it looked, how it was presented and how professional it was and so on.

The other things I had to keep in mind was staff, like how many people had to be on the floor and stuff like that. These are things you have to keep in mind when opening a store, no matter what type, so there were a lot of little details I had to keep in mind around presentation.

Have you made any changes?

I didn’t staff it the way I wanted to, originally. From a resources perspective I tried to use people I had on board, so someone else and I would man the store from time to time, but I’ve moved on from that. I also tried to keep things as lean as possible. And that goes into the design of the store with displays and so on, and also with things like stock levels. I didn’t go crazy with everything; I just approached it calmly and methodically.

The retail industry is filled with discounts at the moment. Have you gone down that route?

I think our intention is just to add value to our own particular business. I think we’re competitive, and we sell a lot of Apple products which don’t lend themselves to being discounted anyway. It’s not a specific thing we look for – instead we try and add value through service quality and that sort of approach.